DoD's $20.25M BAE Systems contract for engineering services shows fair value with 2 bidders

Contract Overview

Contract Amount: $20,250,258 ($20.3M)

Contractor: BAE Systems Technology Solutions & Services Inc.

Awarding Agency: Department of Defense

Start Date: 2009-11-12

End Date: 2016-09-30

Contract Duration: 2,514 days

Daily Burn Rate: $8.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TO N00178-04-D-4018-N409

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $20.3 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC. for work described as: TO N00178-04-D-4018-N409 Key points: 1. Contract value of $20.25M over 7 years suggests moderate annual spending. 2. Full and open competition indicates a potentially competitive bidding process. 3. Two bidders participated, suggesting some level of competition but not broad market engagement. 4. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed closely. 5. Engineering services are critical for defense operations, indicating a strategic need. 6. The contract duration of over 7 years implies a long-term requirement. 7. The award was a delivery order against a larger indefinite-delivery/indefinite-quantity contract. 8. The small business flag is false, suggesting no specific set-aside for small businesses.

Value Assessment

Rating: fair

The total contract value of $20.25M spread over approximately 7 years (from Nov 2009 to Sep 2016) averages to about $2.9M annually. This appears to be a reasonable amount for specialized engineering services within the defense sector. Without specific benchmarks for comparable engineering support contracts for the Department of Defense, it's difficult to definitively assess if the pricing was highly competitive. However, the presence of two bidders suggests that the pricing was likely within an acceptable range for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. Two bidders participated in this specific delivery order competition. While full and open competition is generally preferred, having only two bidders might indicate that the scope of work or specific requirements limited the pool of potential offerors, or that the market for this specialized service is concentrated.

Taxpayer Impact: The use of full and open competition, even with two bidders, generally benefits taxpayers by encouraging multiple companies to offer their best pricing and technical solutions. This helps ensure that the government is not overpaying for services.

Public Impact

The Department of Defense benefits from specialized engineering expertise to support its technological and operational needs. Services delivered likely include design, analysis, testing, and integration of complex defense systems. The geographic impact is primarily within Maryland, where the contract was managed, but the services likely support broader DoD operations. The contract supports a workforce of engineers and technical specialists employed by BAE Systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to increase costs to maximize profit if not closely monitored.
Limited competition (2 bidders) may reduce price pressure compared to a more robust bidding environment.
The long duration of the contract could lead to scope creep or evolving requirements that are not adequately controlled.

Positive Signals

Awarded under full and open competition, which is a positive signal for market engagement.
The contract was a delivery order against a larger IDIQ, suggesting a structured procurement approach.
Engineering services are essential for maintaining and advancing defense capabilities.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader Defense Industrial Base. The market for defense engineering services is substantial, with numerous large and specialized firms competing for government contracts. Spending in this area is driven by the need for advanced technological solutions, system upgrades, and ongoing support for complex military platforms. Comparable spending benchmarks would typically be found within the DoD's overall budget for professional services and research, development, testing, and evaluation (RDT&E).

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss=false, sb=false). Therefore, there are no direct subcontracting implications specifically tied to small business set-asides for this particular award. The prime contractor, BAE Systems, is a large defense contractor, and while they may engage small businesses in their supply chain for various components or services, this contract itself does not mandate it through a set-aside provision.

Oversight & Accountability

Oversight for this contract would typically be provided by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. DCMA is responsible for ensuring contractors meet performance requirements, delivery schedules, and quality standards. The contract type (Cost Plus Fixed Fee) necessitates close financial oversight to manage costs and ensure the fixed fee remains appropriate. Transparency is generally maintained through contract reporting systems, though specific details of performance and cost breakdowns may be subject to proprietary or security restrictions.

Related Government Programs

Defense Engineering Services
Information Technology Professional Services
Research and Development Support Services
Aerospace Engineering and Systems Integration
Naval Systems Engineering Support

Risk Flags

Potential for cost overruns due to CPFF contract type.
Limited competition may reduce price discovery.
Long contract duration requires sustained oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.3 million to BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC.. TO N00178-04-D-4018-N409

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS TECHNOLOGY SOLUTIONS & SERVICES INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $20.3 million.

What is the period of performance?

Start: 2009-11-12. End: 2016-09-30.

What is the track record of BAE Systems Technology Solutions & Services Inc. with the Department of Defense for similar engineering services?

BAE Systems Technology Solutions & Services Inc. has a significant history of contracting with the Department of Defense across various engineering and technical service domains. Reviewing historical contract data reveals numerous awards for support services, system integration, research and development, and sustainment. For engineering services specifically, the company has been a consistent performer, often handling complex projects requiring specialized expertise. Their track record generally indicates a capacity to deliver on large-scale defense contracts, though like any major contractor, specific project performance can vary. Detailed analysis would require examining past performance reviews and any documented issues on prior DoD contracts.

How does the average annual value of this contract compare to other DoD engineering services contracts awarded around the same period?

The average annual value of this contract, approximately $2.9M ($20.25M over ~7 years), falls within a moderate range for specialized engineering services within the DoD. Larger, more complex system development contracts could easily exceed tens or hundreds of millions annually. Conversely, smaller, more focused support tasks might be in the sub-million dollar range. Without access to a comprehensive database of all DoD engineering service contracts from 2009-2016, a precise benchmark is difficult. However, considering BAE Systems is a major contractor and the services are likely specialized, this value suggests a significant but not top-tier project in terms of annual expenditure.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. While the contractor is paid their actual allowable costs plus a predetermined fixed fee, there is less incentive for the contractor to control costs compared to fixed-price contracts. If the contractor's costs escalate beyond initial estimates, the government bears that burden. This necessitates robust government oversight to scrutinize costs, ensure efficiency, and prevent unnecessary expenditures. For engineering services, scope creep—where the project's requirements expand beyond the original agreement—can also drive up costs significantly under a CPFF structure if not managed tightly through change control processes.

How effective is full and open competition with only two bidders in ensuring optimal value for taxpayers?

Full and open competition is generally the most effective method for ensuring optimal value for taxpayers because it maximizes the potential for competitive pricing and innovation. However, when only two bidders participate, the level of competition is reduced compared to scenarios with numerous offers. While two bidders still provide a basis for comparison and price negotiation, it limits the downward pressure on prices that a larger pool of competitors might exert. The government still benefits from having alternatives, but the optimal value may be constrained if the market truly supports more potential bidders who were deterred by requirements, complexity, or other factors.

What is the typical duration for engineering services contracts within the Department of Defense, and how does this contract's duration compare?

Engineering services contracts within the Department of Defense can vary significantly in duration, ranging from short-term projects lasting a few months to long-term sustainment and development efforts spanning many years. Contracts awarded as Delivery Orders against Indefinite Delivery/Indefinite Quantity (IDIQ) vehicles, like this one appears to be, often have base periods and option periods that can extend their total duration. A duration of approximately 7 years (Nov 2009 - Sep 2016) is not uncommon for complex, ongoing engineering support requirements, particularly those tied to major defense systems that require continuous development, modification, or sustainment over their lifecycle.

What are the implications of the 'st': 'MD' and 'sn': 'MARYLAND' fields for this contract?

The fields 'st': 'MD' and 'sn': 'MARYLAND' indicate that the contract's administrative or performance location is associated with the state of Maryland. This could mean that the contracting office responsible for managing the award is located in Maryland, or that a significant portion of the engineering services were performed or managed from a facility within Maryland. For the Department of Defense, Maryland hosts numerous defense agencies, research centers, and contractor facilities, making it a hub for defense-related activities and contracts. This geographic indicator helps in understanding the regional economic impact and the distribution of defense spending.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0002409R3268

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Compagnie DE Developpement DE L'eau S.A.

Address: 520 GAITHER ROAD, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $21,847,337

Exercised Options: $21,847,337

Current Obligation: $20,250,258

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4018

IDV Type: IDC

Timeline